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HUMAN RESOURCE MANAGEMENT

AKZO NOBLE ICI PAINTS PAKISTAN

Group Members | Ali Butt, Ameer Taimur Ali, Anum Iftikhar, Natasha Farooq, Sadaf Ikram, Syeda Madeeha Atta

Akzo Noble IcI Paints Pakistan Overview Of The Organization:

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ICI has consistently developed new and innovative areas of business since its formation in December 1926, by the merger of four of the largest chemical companies in the UK. ICI today is a collection of world-class businesses, many of them leaders in their sectors. They are strongly led, technologically sophisticated with healthy and sustainable long-term growth prospects. ICI Pakistan Limited was set up as a public limited company in Pakistan in 1952. ICIs presence in this part of the world, however, predates the formation of the public limited company and indeed, Pakistan itself. The Khewra Soda Ash Company, a predecessor of ICI Pakistan Limited, set up a soda ash manufacturing facility in Khewra in 1944 with a capacity of 18,000 tons per annum. This facility was sited next to the salt range as rock salt and limestone; two key raw materials for manufacturing soda ash were available here in abundance. The turnover of ICI Pakistan Limited in 2007 was Rs 25.97 billion and the profit before tax crossed Rs. 2.77 Billion. It is one of the largest quoted companies on the Karachi, Lahore and Islamabad Stock Exchanges with a paid up share capital of Rs 1.39 billion. The company has around 1300 permanent employees. ICI Pakistan now operates as an independent business unit within Akzo Nobel and as a part of its specialty chemicals portfolio. ICI Pakistan has, and continues to develop, a portfolio of businesses that are major players within their respective industries, bringing together outstanding knowledge of customer needs with leading edge technology platforms to provide superior products to its customers. Through these attributes, it aims to create superior value for ICI customers and shareholders, without compromising its commitment to safety, health, environment and the communities in which it operates.

Akzo Noble IcI Paints Pakistan History Of Akzo Nobel IcI Pakistan

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Akzo Nobel is the largest global paints and Coatings Company and a major producer of specialty chemicals. It is a Fortune 500 company, and is listed on the Euro next Amsterdam stock exchange as well as being included on the FTSE4Good Index, and is also Chemicals Industry leader on the Dow Jones Sustainability Indexes. On 2nd January 2008 Akzo Nobel made an offer for the acquisition of ICI Plc. Akzo Nobel is a Fortune Global 500, reputedly the Chemicals industry leader on the Dow Jones Sustainability Indexes and is included on the FTSE4Good Index. It is a British company, with subsidiaries all over the globe. It was formed in 1926 from the union of four British companies, Brunner Mond, Nobel Explosives, United Alkali Company and British Dyestuffs Corporation. Over the 80 years of its life it has established its name and has created an excellent reputation for itself and its products. However when Akzo Nobel acquired ICI in January 2008, it became the holding company of ICI Pakistan Ltd. Akzo Nobel ICI Pakistan limited is no longer a subsidiary but functions as an independent business unit within Akzo Nobel Akzo Nobel formal offer for the acquisition of ICI Plc, the parent company of ICI Omicron B.V., was approved by the shareholders of both companies as well as regulatory authorities, and the take-over process was completed on 2 January 2008, making Akzo Nobel the ultimate holding company of ICI Pakistan Limited Akzo Nobel is a dynamic, forward-looking company that strives to deliver only the best of products and solutions to its customers and that is driven by a set of values geared toward challenging the future, thinking with courage, and delivering tomorrows answers today, all to benefit the customer by maintaining competitiveness and anticipating future needs before they arise.

Akzo Noble IcI Paints Pakistan Akzo Nobel IcI Pakistan Division

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Akzo Nobel ICI Paints is the leading paint manufacturing company in Pakistan and it has five businesses in Pakistan, namely: y y y y y Polyester Soda Ash Paints Chemicals Life Science

As an organization, Akzo Nobel ICI Pakistan has incorporated into its administration the same business ethics that have made Akzo Nobel a success. As it says in their mission statement, Akzo Nobel ICI Paints focuses on running a high quality, profitable and growth oriented business in an exciting and safe business environment. Akzo Nobel ICI Paints believe in y y y y Giving customers products and services that improve their future In promoting and embracing new ideas and thinking perspectives In developing and nurturing new and existing talents of their employees In having the strength and courage to question ourselves and our existing norms

In doing all things with integrity and taking responsibilities for our actions Akzo Nobel ICI Paints main business activity is manufacturing and distributing high quality paints to their customers. Their vision is to further strengthen their position as the leading paint company in Pakistan and drive their operations to world class standards with a relentless commitment to Safety, Security and Health coupled with Business Excellence.

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Akzo Noble IcI Paints Pakistan INTERNAL ANALYSIS SWOT Analysis

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After studying the ICI paints strategies, and its performance we have identified some strengths, weakness opportunities and threats. Strengths

1. ICIs Positive Image

ICI has positive image and reputation in the minds of customers so far them its a great strength because its helps in the sale of their products.

2. Financial Strength Of The Business

The paints business is financially very strong as mentioned by present annual report.

3. Established Nation- Wide Infra-Structure

The ICI paints business has established nation-Wide infrastructure. It has network of dealers in all over the country, which will help in the sale of companys products.

4. Committed and enthusiastic staff 5. Up -To -Date Technology

ICI paints have up to date technology in its production. ICI paints Pakistan claim that they offer colors to the customers out of which customer can demand any color and then they will make that color for customer. For that they have latest machinery in which they just give name of the color that customer want and then machinery gave them the formula which will produce that particular color a then they will produce that color for the customer Weaknesses 1. No Distribution Network The major weakness of ICI paints business is that they dont have their own distribution network. They just have dealers in different cities which carry their products and then retailers have to use their own means to get paint from those dealers and then make it available for sale for the customer.

Akzo Noble IcI Paints Pakistan Opportunities 1. Increase Quality Awareness Among The Customers

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One of the greatest opportunities for ICI paints is that now a days people are very much conscious about the quality of the paints and they are aware of the fact that good quality paint is long lasting. As ICI is producing high quality so it will increase the demand of companys so it is a great opportunity for ICI paint 2. Increasing Paints Markets Another opportunity for ICI is that as now a days in Afghanistan re-construction of the country is taking places o there will be great demand for paints and ICI paints can reap this opportunity by exporting paints products to Afghanistan and can earn great profits Threats 1. Decrease in construction activity Due to decrease in the construction activity in the country the companys sales are decreasing as compared to previous few years 2. Increase competition from cheap paints producers Cheap paints producers capture almost 60% of the market share of paints so its a great threat for ICI paints because other companies will share the market as well

Akzo Noble IcI Paints Pakistan Mission Statement

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To be the partner of first choice for customers and suppliers, ensuring sustained leadership position in the markets where we compete, delivering long-term business value through a high performance culture, innovation, ethics and responsible care Values Our values define what we are and what we aim to be. They reflect the way we should operate both internally and externally. And theyre summed up in the line Tomorrows Answers Today.

Akzo Noble IcI Paints Pakistan Vision And Values We believe in Focusing on our customers future first Embracing entrepreneurial thinking Developing the talents of our people The courage and curiosity to question Integrity and responsibility in our actions

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These values give us standards to measure ourselves by, particularly in our dealings with customers, suppliers, our own people and the wider world. The values have real meaning for us and the way we behave. What these values mean is explained in a great detail as follows. Focusing On Our Customers Future First We can guarantee our future only by giving our customers products and services that improve their future. So this value comes first. Its our priority and the reason why we exist. Weve always met the needs of our customers that are why weve grown. But now we make it very clear: its the basis of everything we do. Embracing Entrepreneurial Thinking New thinking and new ideas are everything if were to compete. So we need an environment and a mindset that encourages new ideas from individuals and teams. Yes, not Yes, but... Why not? Not Why? We might fail occasionally, but well get great ideas to market more quickly as a result. And well keep more people with truly original ideas within the company. Developing The Talents Of Our People Our business will grow if our people grow too. So were committed to professional and personal development. Well do all we can to develop existing talents, nurture new skills and progress within Akzo Nobel. Through this commitment, well attract and retain people of the highest quality to develop the business.

Akzo Noble IcI Paints Pakistan The Courage And Curiosity To Question

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Akzo Nobel isnt one of those companies with a set way of doing things. We dislike rigid hierarchies and we want our people to take a broad, interested view of the world. We like them to ask questions. Is there a better way? There generally is a better way, if we challenge ourselves and our customers to look at things differently. Its the way we improve. Integrity And Responsibility In Our Actions Business needs to work within a framework. Our employees have to be aware of rules and regulations that they must comply with, in whatever part of the world they work. But integrity and responsibility go deeper than that. Theyre about doing things in the right way, as individuals and as a company. Ethical and responsible behavior matters to our business. If we do the right things, people will know were a company that can be trusted. Theyll then be more likely to work with us and invest in us which are good for our long-term growth.

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The turnover graph shows that from 2003 to 2008 there are periods when the turn over decreased but with the passage of time it has improved and now up till 2008 it was $31,922.

Operating Profit

4000 3352 3000 2479 2000 1088 1347 1000 0 2003 2004 2005 2006 Operating Profit 2007 2008 Operating Profit 1842 2984

Operating profits graph illustrates that these profits are also increasing from 2003 to 2008. The operating profits figure in 2008 is $3,352.

Akzo Noble IcI Paints Pakistan Assess The Role Of Hr Practice In Contributing To Organizational Effectiveness The Talent Factory

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ICI Pakistan is one of the largest companies in the country. Moreover, an employer of choice With a human capital of over 1,300 employees in their Talent Factory, they know that their employees shape their companys future. The talent factory team is on a mission: to unleash the organizations intellectual energy to propel extraordinary business growth. We value and encourage continuous improvement at all levels - all for forming a sustainable structure that will carry us through this climate of change The Human Resource Effectiveness can be analyzed by calculating the following ratios: staffing ratios, employee turnover, occupational health and safety and sick leave, human resource budgets, overtime and recruitment, and salary costs and profit ratios. There can be specific benchmark calculations like HR staff percentage in comparison to total staff, budget per employee in HR department the percentage of HR budget as percentage of revenue.  HR practice in ICI ICI has diversified their products, services and shown creativity in their advertising campaigns. The company has exercised the same level of creativity in developing their way of work. ICI has established a unique and new way to carry out their operations with a key focus on quality, simplicity coupled with productivity and output. At ICI, they understand that their business will grow only if our people grow too. This is why one of their values is all about developing human resource talent. They firmly believe all our employees have talents that need to be developed and nurtured. For implementing work structures that should go beyond the normal forms of reflective channels of communication, ICI seeks their employees performance. Equality is the essence of the ICI, where the CEO, VPs, Directors, Managers, Executives and Officers all share the same workspace and theres an open system of communication among them.

Akzo Noble IcI Paints Pakistan  Human Resource Planning

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The recruitment process at Akzo Nobel ICI paints consists of numerous phases starting off with labor demand and supply forecasting, moving on to formal assessment all the way up to the final selection. Mr. Hassan Aftab (HR Lead for Akzo Nobel Paints business), was of the view that the recruitment process always begins with identifying the vacant positions and outlining the job descriptions. It was emphasized that it is very important to ensure that a predetermined number of employees with the relevant skills are available in the future. The HR department uses a comprehensive quantitative approach to forecast future HR requirements. This is done by looking at empirical data from the past from different divisions and relating that to the growth in those respective divisions. Also if new divisions are added, estimates are made using data from other divisions. This gives the HR department a clear idea of how to plan the recruitment.  Recruitment Methods and Policy Mr. Aftab stressed the importance of HR planning since based on this assessment the HR department decides whether to opt for external or internal recruitment. Internal recruitment usually serves to fill in positions that are relatively higher up in the hierarchy. If there are employees present within the organization who fulfill the criteria then there is no need for external recruitment. Otherwise external recruitment is preferred. External recruitment is further classified into entry level and lateral hiring. Lateral hiring is associated with recruiting experienced professionals from the external job market to fill in the higher managerial posts within the organization. It was interesting to observe that Mr. Aftab emphasized that Akzo Nobel ICI discouraged lateral hiring (head hunting) and practiced it only in times of dire need when there were no suitable personnel within the organization. We believe however that ICI should pursue a mix of internal and external hiring. This is because employees who start from an entry level and stay up to go in to the higher hierarchical levels may develop a single tracked thinking and bringing in people from the outside might lend in fresh and new perspectives to situations.  Recruitment Activity The entry level management trainee (MTO) and commercial trainee (CTO) program formed the backbone when it came to the development of the human resources at Akzo Nobel ICI paints since they strongly believed in internal hiring. Mr. Aftab stressed on the fact that the ideology at Akzo Nobel ICI paints was to develop future leaders rather than hire successful managers externally. This justified why the MTO and CTO program were at the centre stage of the strategic recruitment process. Moreover he went on to reveal the fact that the

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current Vice President and the General Manager of Akzo Nobel ICI paints were themselves management trainees to begin with. Analyzing the entry level recruitment process in detail Akzo Nobel ICI paints aims to attract fresh graduates from leading universities such as LUMS, IBA, and LSE to name a few from across the country. For this purpose Akzo Nobel ICI paints conducts annual road shows and publicity campaigns. The applicants are made to sit in for a recruitment test followed by a series of group discussions and comprehensive interviews before they are formally inducted into the company. Mr. Aftab pointed out that the ideal candidate was one who possessed a high degree of potential, a logical mind and was capable of working under challenging situations. Apart from this, a minimum GPA and inter personal skills were also of significance. The new recruits are then subject to a one year probation period after which they are confirmed as permanent employees. Metrics HR mangers assess the performance of their employees with the help of metrics i.e. some calculations that can be considered as a judgmental tool in the qualitative and quantitative functioning of the firm. Metric is the imperative tool to judge the HR practice effectiveness in the firm. Employee Compensation Motivation is one of the most important factors that set apart the employees of an organization and their overall job satisfaction and productivity. It is what drives the competitive edge, enabling an organization to outperform its competitors owing to its highly motivated workforce. Motivation includes compensating and rewarding the employees for their performance, creating a safe and conducive environment as well as addressing issues that lead to dissatisfaction. Salary Structure Akzo Nobel ICI paints in order to motivate its workers offers a wide range of incentives. The monetary benefits include a salary structure that is a mix of pay for performance as well as dependent on the hierarchical level. Salary increments and bonuses also act as encouraging tools to extract good performance and high productivity. The overall salary package for a CTO (Commercial Trainee Officer) is Rs. 45,000 and that for a MTO (Management Trainee Officer) is Rs. 60,000 both of which are slightly above market average for the respective posts.

Akzo Noble IcI Paints Pakistan Fringe Benefits

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ICI paints offer a comprehensive retirement pension plan which is a huge incentive for the employees. There is also a free lifetime health insurance which covers for the whole family even after the retirement. Moreover, the focus is to motivate workers by assigning them challenging tasks along with giving them full independence regarding how to go about achieving their goals. Thus the management aims to provide a working environment in which the employees feel engaged and consider themselves to be an integral part of the organization. The overall compensation plan is oriented to be in line with the strategic business objectives and harboring leadership and entrepreneurial qualities within the employees. It is focused on the employees giving them maximum incentive to bring out high levels of productivity as well as inculcate loyalty. Employee Health & Safety Employee health and safety have become major considerations for any organization. The Occupational Health and Service (OHS) programs now give provisions for a safe and healthy environment. OHS should be a part of the performance appraisal so that it enables the HR manager to obtain feedback on the efficiency and the effectiveness of the organizations OHS program. Safety, Health, Environment and Security (SHES) Health and safety are also key concerns for the management at Akzo Nobel ICI paints. For this purpose there exists an independent department called the Safety, Health, Environment and Security (SHES) which is constantly engaged in ensuring a safe and healthy work environment as well as eliminating any possible hazards. The Safety, Heath, Environment and Security (SHES) department is very well established and active at Akzo Nobel ICI and utmost importance is given to the implementation of the policies. Hassan Aftab said that for any new employee or intern there is an SHES orientation and test. All SHES policies are clearly outlined and explained to the new recruits. The recruits then take a test which is used to gauge their information retention with respect to the SHES orientation. Those who fail the test are reoriented. This is a comprehensive way of orienting the recruits and minimizing costs due to any health or safety hazards. A person entering the factory has to wear a helmet, mask, long boots, glasses and these kits are provided by Akzo Nobel ICI to every worker and even visitors. Other safety measures include restrictions on using cell phones while walking, or reading anything while getting off the stairs. These measures were actually seen in implementation which gives an impression that indeed the Akzo Nobel ICI people were concerned

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about the safety of the employees. The security system was also robust and no visitor was allowed to enter in the vicinity of Akzo Nobel ICI without being accompanied by an Akzo Nobel ICI employee. Employee Stress Stress is a major concern for any organization. Increased levels of stress among employees can often lead to reduced productivity and even burnout in extreme cases. If appropriate safety nets are not provided for employees to manage stress, and the organizational workload is too stressful it can even lead to employee dissatisfaction and high turnover rate. ICI realizes this and has taken steps to help employees overcome stress. They have built in a mini golf area on their premises. Employees can take time off to enjoy themselves playing golf while they de stress. There are also regular team-building tours which give employees a break from work and help not only to reduce stress but also act as strengthening the mutual bonds, positive working relationships and foster cohesion amongst the employees. The overall motivation and satisfaction level of the workforce, from the factory workers to the managers was high and most of them seemed to be enjoying working at Akzo Nobel ICI. In response to the various employee and staff interviews that we conducted, it was observed that the employees at Akzo Nobel ICI paints were highly motivated and satisfied with management policies. This was further supported by a very nominal average annual labor turnover figure of 3 to 4 percent. Effects The outcome of appropriate and supreme HR policies is evident from the growth and the number of products that are there in the market of ICI. It is a symbol of quality and trust. ICI has proved its worth by making their profit ratio a benchmark in the market they belong to

Akzo Noble IcI Paints Pakistan Assess The Challenges And Opportunities Lying Ahead Of The Organization

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As mentioned earlier, ICI Paints is a market leader in the global paints and coatings business worldwide and to attain this position the organization has strived to provide its workers with a global innovative working atmosphere where they work together to find and share better solutions, making ICI Paints, its brands, products and services, the first choice for people who want the best. Its strategy is to maintain and develop its branded leading market positions in the global paints and coatings industry by continuously improving its level of performance and production. Now to achieve this goal one of the major objective of the organization is to develop its Human Resource Department and to do that there are many challenges that the top management has to deal with. The world is changing at a rapid pace relentlessly and to exist in this competitive environment, organizations need to evolve and adapt continuously. ICI understands this and is aware that the only way it can do is by increasing the level of its companys performance thus improving its HR department. But in doing so, it encounters several challenges. One of the key obstacles in the way of ICI is the continuous developments in different aspects of HRM. Every other day new policies and plans are being introduced and it is extremely difficult for a company to revamp its system altogether and especially of something as important as HRD which is the backbone of the organization. Another major challenge faced by ICI is the current financial crisis prevailing in the world economy which has lead many companies towards downsizing and budget cuts. This has been having drastic effects for the HR department as it gets the worst budget slash. Therefore, cut down in the budget is another key hurdle in the way of ICI in attempting to improve its Human Resource department. Thirdly with the changing trends, the companies authoritative culture is now giving way to democratic culture. The human resources of any company are gaining more importance that its financial resources thus making their Human Resource Department a strategic member of the executive level hierarchy. If ICI wants to improve the performance of its company then it also needs to make amendments in its way of working and planning by giving its HR department more access in the areas of development and organizing which is not easy considering the present authoritarian environment prevalent in the top management. Bringing a change is another problem that needs to be faced. Despite all this it is not undeniable that improving the position and status of HR department of ICI can open new doors of development and growth for the company. If the company is able to retain professional and skilled people in its Human Resource Department who are capable in dealing with its employees effectively then the company can go a long way as most of its success depends largely on its employees.

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ICI can only remain at the top of the paint and coating business in the world if its able to attract and retain its skilled workers successfully. The secret behind ICIs accomplishments is its innovations in this industry, it lies in the ability of its workers to find solutions unforeseen problems before their competitors that is keeping them ahead in the market and that is only possible if the workers are provided with sound and healthy working environment which is capable of enhancing their skills and ideas. Provision of this atmosphere depends on the HR department. Thus, if ICI focuses on improving its HR department it can reap wide benefits from it.

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Awards And Achievements

2nd Best Corporate Report Award 2007 A joint evaluation committee of the Institute of Chartered Accountants of Pakistan and the Institute of Cost and Management Accountants of Pakistan declared our Annual Report for the year ended December 31 2007 to be the 2nd Best Corporate Report amongst listed companies in the chemical & fertilizer sector. FBR Award We were awarded Taxpayers Excellence Award2009 by the Large Taxpayer Unit, Karachi, a division/function of Federal Board of Revenue, Islamabad. Since 1995, we have paid over Rs 31billion in Government duties & taxes. 25th MAP Corporate Excellence Award We were also declared the winner of the 25th MAP Corporate Excellence Award in the chemicals and allied sector organized by the Management Association of Pakistan. Under this Companies are evaluated on the basis of financial performance and best management practices.

Akzo Noble IcI Paints Pakistan CONCLUSION

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To be the partner of first choice for customers and suppliers, ensuring sustained leadership position in the markets where we compete, delivering long-term business value through a high performance culture, innovation, ethics and responsible care. After visiting Akzo Nobel ICI a couple of times and interviewing a handful of managers we found out that every employee had respect, care and a sense of responsibility towards AkzoNobel ICI. The managers were very well organized and knew exactly what they were required to do and how they should go about achieving their objectives. Every manager had the mission statement at his desk and was very well aware of exactly what it meant. The claim of the HR manager that they recruited people and then made them into successful leaders rather than directly recruiting successful managers was supported by the fact the Vice President of the Paint division was a Management Trainee to start with. Similarly the current general business manager was also a management trainee at the start as well. Such examples show that Akzo Nobel ICI is a merit employer and that a deserving and capable person gets his due. The HR department is constantly looking for innovative ways to transform Akzo Nobel ICIs workforce which lends a competitive edge to the organization over its rivals making it the success factor behind Akzo Nobel ICIs performance. Moreover, the aim goes beyond solely developing such a workforce, extending into ensuring its retention and hence leading to the realization of Akzo Nobel ICIs vision. Another aspect which was observed by our team was the freedom given to the employees in choosing how to achieve or go about performing a particular task assigned to them. The subordinates enjoyed complete freedom of working while adhering to the overall norms and values of AkzoNobel ICI. However this freedom also meant higher accountability as the seniors demanded explanation and reasoning for every important action, whether it yielded right or wrong consequences. The working environment was very comfortable and every employee was supportive and ready to help each other in case of need. This was perhaps because of the fact that there wasnt a boss-junior relationship as such. No junior had to take an appointment from his senior in order to discuss something if the senior was not busy. This practice results in increasing the job satisfaction of the junior staff as they also feel important and their motivation increases due to the fact that they have some say and are not mere servants of the organization. Not to forget, there were formal meetings as well which were pre-planned.

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The overall motivation and satisfaction level of the workforce, from the factory workers to the managers was high and most of them seemed to be enjoying work at Akzo Nobel ICI. In a nutshell, Akzo Nobel ICIs workforce was very much committed to following the vision of the top brass of the management and it would be really difficult for any competing firm to head hunt a manager from such an organization where the level of loyalty and sense of belonging of the employees was exemplarily high.